Which location is better to incorporate, US or Singapore? This is for a decision analysis company

We are in the process of setting up our decision analysis company. The main target market is US/Canada, our angel investor is in Singapore. He says Singapore is a better place to incorporate. Is this true? What are the various factors to consider?

It would make more sense to set up the holding where you plan to open the office. If your target is U.S. for which you will need office, then it does not make sense to open a office and holding in Singapore.

Betty raised a good point on tax which is one of the criterion among many.

Anton Yakovlev
Founder of four successful businesses on two continents who can help you do the same

August 9th, 2015

Wherever you customers are. Being as close to your customers as possible is a key to my mind. You could also incorporate both in US and Singapore. And probably get some tax benefits, depending on your business structure.

If you need someone to represent you in US we could talk. Feel free to connect. I'm always ready to help.

I'm a US tax accountant with background in international. If you will
be doing business in the US, you need a company incorporated in the US.
There are several choices regarding the type of US company to
incorporate. The tax situation for the company and its owners will vary
depending on the type of company which you choose. The company will
have US source income and need to file tax returns at the national,
federal level and for each state in which the company does business.

From the US tax perspective, incorporating in Singapore does not matter
as you need a US company to operate here and the US company will have US
income and file taxes in the US.

I have gone through this decision tree a year ago. I moved to Singapore a couple of years ago and wanted to understand where it would be better to set up my venture. I would agree with the opinions on setting up where your market is. There are a few things to consider which might seem trivial, but could present quite a burden when you are trying to focus on getting your company up and running. Singapore is simple incorporate in, however, it is quite another thing to maintain your company there. There are all sorts of structures that you have to have in place that will drain your budget and time. If you are not operating in Singapore, you can fall into bureaucratic categories that can lead to undesired outcomes. If you have your market in the U.S., you will have to hire people there, and you have to have management capacity there, so you have to have an entity there anyway. Also, are you the resident/citizen of SIngapore? If you are not a U.S. citizen and try to employ yourself in the U.S., then you might want to set up the Singapore entity at the beginning as it is not trivial also to get work visas in the U.S. Incorporating in the U.S. also has a number of issues associated with it. I don't have enough information about your situation to give further comments, but I am happy to have a call to share with you my experiences running entities in both countries.

Also consider additional investment on top of the angel's money. I have had clients set their companies up in Singapore for personal income tax reasons only to soon thereafter find that serious investors (from outside of Singapore) want to invest in a more transparent U.S. based company. Also, you should consider compartmentalizing your local revenues in local geographical entities from a tax perspective to avoid taxation of world-wide income (you might create a parent/child structure).

Note that to establish a U.S. corporation, you will need a U.S. address. That address should be where you established operations. I would think that you are already in Singapore and that is not a problem. And there are 50 states in the U.S. (plus District of Columbia) and one can incorporate in any of them, preferably in the State where you have an office. (I have written a blog about incorporation, including why Delaware is the favorite location to incorporate. Still, you must register a presence if your operations is in another State outside of Delaware.) If this is a startup, which I am sure you are, you are long ways from setting up entities. Then there is the IP registration in the States.

+1 Mike: if you operate out of the US, it's pointless to incorporate in Singapore: you'll just have to file tax forms twice (regardless of where you incorporate, you also have to file where you operate).

If you operate out of Singapore, then just incorporate there.

If you operate out of a 3rd country, you likely have to incorporate there.

Until you have income from multiple countries (and large earnings), filing taxes in multiple countries is not a good idea: incorporate where you operate.

As an aside, your investor is correct - Singapore is probably the easiest place in the world to be compliant in. This is not the right way to choose where to incorporate however.